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There are many factors contributing to Hawaii’s housing crisis, but the core of the problem is straightforward: there just aren’t enough places to live that regular people can afford.

Available housing is usually priced out of reach for most local people, and since high-end homes tend to be more profitable for developers, very little energy is directed to affordable projects. This puts a chokehold on the housing market, felt most severely by people in lower-income brackets, but nonetheless suffocating for small-business owners, pilots, teachers, firefighters, nurses — the kind of people who make society function and communities livable.

A lot of popular ideas about the problem are focused on trying to reduce “bad” demand for local housing: taxing owners of perpetually unoccupied units, cracking down on short-term rentals, disincentivizing quick-flip investing. Those kinds of things might help a little, but in the absence of developing more affordable housing, they’re likely not enough.

Development in Hawaii is fraught. Some challenges are unavoidable. Since Hawaii is so geographically isolated, building materials will always be more expensive than they are on the mainland, and the history of development in Hawaii is inextricably linked to the disenfranchisement and displacement of Hawaiians, still ongoing. There’s no easy way around these issues.

But some of the challenges to developing new housing are self-inflicted, specifically when it comes to zoning laws. A growing body of literature suggests a direct correlation between strict zoning requirements and housing affordability.

A landmark research paper from 2017 estimated that the U.S. gross domestic product would increase by 9% if housing construction were plentiful in just three highly productive areas: New York, San Francisco and San Jose, though other estimates with the same data have been as high as a 36% GDP increase.

A 2018 study that looked at cities nationwide found that “when housing supply is highly regulated in a certain metropolitan area, housing prices are higher and population growth is smaller relative to the level of demand.” A UHERO report last year echoed those findings for Hawaii, considered the most regulated housing market in the country.

In his 2022 book “Arbitrary Lines: How Zoning Broke The American City And How To Fix It,” M. Nolan Gray identifies the three primary ways that zoning drives up housing costs. Zoning limits the overall construction of new housing by placing limits on density and, therefore, restricting the type of housing that is allowed; it causes the housing it does allow to become more expensive; and it delays the development process altogether, sometimes for years.

As we’ve seen locally, the power to delay development can lead to outright corruption and abuse.

“These three combined forces add up so that we can predict regional variation in housing affordability if we know how restrictive their zoning rules are,” Gray says.

Zoning laws in Hawaii intensify these factors, since land is naturally at a premium due to steep mountainsides and eroding shorelines.

“With the state Land Use Commission, 5% of the land has been zoned as urban, and that has restricted the supply of available land for building housing,” says Joe Kent, executive vice president of the Grassroot Institute of Hawaii. “But it’s actually a lot less, because not all 5% of that land is used for housing. Some of it is industrial zones, or airports, or preserved as open space because of county level zoning. And that’s just two layers of a six layer cake, because then you have the island plan, the community plan, the special management area zone, the historic district. There’s all these different layers.”

Much of Hawaii’s zoning laws were written to preserve agricultural land.

“But we’ve seen the agriculture industry go fallow in the state,” Kent says, “and part of that is because housing prices
have gone up so much that we can’t pay workers enough to farm the land.”

Meanwhile, sprawling estates like Oprah Winfrey’s Maui property can be fitted to meet the qualifications of agricultural zoning.

“When developers aren’t allowed to build affordable housing, they build mansions instead,” Kent says.

The myth of zoning is that, without it, there would be no separation between incompatible developments. Factories would emerge next to elementary schools, slaughterhouses would take over your quiet cul-de-sac.

Gray, who is the research director for California YIMBY and a former city planner for New York City, dismisses these concerns.

“Markets naturally sort different uses to different places,” he says. “Industry naturally wants to be off the freeway, out on the periphery where land is cheap. Active commercial sites naturally want to be on the major corridors of population centers. Nobody wants to build a warehouse or a shopping mall on your cul-de-sac, just as much as you don’t want a warehouse or shopping mall built on your cul-de-sac.”

“Where that doesn’t happen, we can deal with it by regulating the impacts,” Gray continues. “We can set rules for how much noise you can generate, or what hours of operation you can maintain, or how much traffic you can generate. It’s perfectly appropriate to regulate the things that people care about. But this justification for zoning doesn’t hold up in the historical record. All zoning added to the picture was segregation based on race and class, and micromanaging the forms that buildings take.”

The history of zoning is crucial to understanding how it came to where it is now. Most people assume that if a rule exists, it’s there for a reason, and if it persists, it must be there for a good reason. In reality, the first zoning laws in America were designed to keep working-class people and ethnic minorities out of wealthy neighborhoods.

In 1916 New York City, the first zoning laws were nominally passed to prevent the manufacturing industry from encroaching on commercial business areas, though you’d think retailers would want more foot traffic, not less. But these laws were championed by retail landlords who characterized the manufacturing workers — primarily young Jewish immigrants — as “flies” that would scare off shoppers.

Around the same time, Berkeley passed zoning laws excluding industry from residential neighborhoods. This might seem reasonable at first, but when pressed for specific examples of unwanted industries, framers of those zoning laws cited “Chinese-owned laundries,” not because of noise or fire concerns, but because they risked bringing in “negroes and Orientals,” specifically the “heathen Chinese.”

A close inspection of zoning invariably leads back to racist desires for segregation, often under the guise of buildings being too tall, density being too high or uses being incompatible. Cities with little to no zoning restrictions, like Tokyo or Houston, offer concrete proof of Gray’s rebuttal that markets naturally sort different uses according to their locational needs.

If the history of zoning is riddled with detestable motivations, and the consequences of zoning today are higher housing costs, lower growth and economic dislocation, then why are we still doing this?

Part of it is political inertia, part of it is a public that gives zoning a shrugging benefit of the doubt, often confusing it for city planning and regulation in general (which it isn’t, although in recent years zoning concerns have consumed the time of city planners and regulators).

But much of it is the people who benefit from the status quo raising up the drawbridge behind them. The quintessential NIMBY concern is that development will fundamentally alter communities for the worse, but we’ve seen just the opposite in Hawaii.

The people who grew up here, who make Hawaii what it is, are leaving. They’re being pushed out by people who often care little about Hawaii’s Indigenous or local cultures, who see Hawaii as nothing more than a beachside vacation and a good real estate investment.

“You preserve community character by letting a place grow and adapt,” Gray says. “When that’s restricted, it makes places more expensive and exclusionary. Zoning doesn’t preserve community character, it destroys it.”